Ameresco, Inc. Annual report pursuant to Section 13 and 15(d)

Annual report pursuant to Section 13 and 15(d)

Long-Term Debt

Long-Term Debt

12 Months Ended

Dec. 31, 2019

Debt Disclosure [Abstract]

Long-Term Debt

LONG-TERM DEBT

Long-term debt comprised the following:



	Commencement Date	Maturity Date	Acceleration Clause⁽²⁾	Rate as of December 31,		Balance as of December 31,
	Commencement Date	Maturity Date	Acceleration Clause⁽²⁾	2019		2019		2018
Senior secured credit facility, interest at varying rates monthly in arrears	June 2015	June 2024	NA	4.270	%	$	112,216	$	43,074
Variable rate term loan payable in semi-annual installments	January 2006	February 2021	Yes	4.158	%	625		936
Variable rate term loan payable in semi-annual installments	January 2006	June 2024	Yes	3.908	%	6,609		7,426
Term loan payable in quarterly installments	March 2011	March 2021	Yes	7.250	%	831		1,464
Term loan payable in monthly installments	October 2011	June 2028	NA	6.110	%	3,649		3,843
Variable rate term loan payable in quarterly installments	October 2012	June 2020	NA	5.408	%	28,217		30,674
Variable rate term loan payable in quarterly installments	September 2015	March 2023	NA	4.408	%	15,976		17,208
Term loan payable in quarterly installments	August 2016	June 2031	NA	4.950	%	3,769		3,925
Term loan payable in quarterly installments	March 2017	March 2028	NA	5.000	%	3,521		3,945
Term loan payable in monthly installments	April 2017	April 2027	NA	4.500	%	22,553		22,081
Term loan payable in quarterly installments	April 2017	February 2034	NA	5.610	%	2,706		2,735
Variable rate term loan payable in quarterly installments	June 2017	December 2027	NA	4.358	%	11,740		12,915
Variable rate term loan payable in quarterly installments	February 2018	August 2022	Yes	9.408	%	15,645		21,475
Term loan payable in quarterly installments	June 2018	December 2038	Yes	5.150	%	28,583		30,069
Variable rate term loan payable in semi-annual installments	June 2018	June 2033	Yes	3.958	%	9,003		9,668
Variable rate term loan payable in monthly/quarterly installments	October 2018	October 2029	Yes	4.600	%	9,092		9,072
Long term finance liability in semi-annual installments⁽³⁾	July 2019	July 2039	NA	0.280	%	3,841		—
Long term finance liability in semi-annual installments⁽³⁾	November 2019	November 2039	NA	—	%	8,794		—
Term loan payable in quarterly installments	December 2019	December 2021	Yes	6.500	%	27,226		—
Financing leases⁽¹⁾						28,497		33,363
						343,093		253,873
Less - current maturities						69,969		26,890
Less - deferred financing fees						6,943		7,821
Long-term debt						$	266,181	$	219,162

⁽¹⁾Financing leases do not include approximately $22,015 in future interest payments

⁽²⁾These agreements have acceleration causes that, in the event of default, as defined, the payee has the option to accelerate payment terms and make due the remaining principal and the required interest balance according to the agreement

⁽³⁾These agreements are sale-leaseback arrangements that provides for the sale of solar PV projects to a third party investor and the simultaneous leaseback of the projects. In accordance with Topic 842, Leases, these transactions are accounted for as a failed sale as the Company retains control of the underlying assets and as such, are classified as financing liabilities. The low interest rates are the results of tax credits which were transferred to the coutnerparty.

Aggregate maturities of long-term debt for the years ended December 31, are as follows:



2020	$	69,969
2021	36,930
2022	29,940
2023	32,719
2024	105,732
Thereafter	70,458
Debt Discount	(2,655		)
	$	343,093

Senior Secured Credit Facility - Revolver and Term Loan

On June 28, 2019, we entered into a fourth amended and restated bank credit facility with three banks. The new credit facility replaces and extends our existing credit facility, which was scheduled to expire on June 30, 2020. The amended revolving credit and term loan facility mature on June 28, 2024, when all amounts will be due and payable in full. The Company expects to use the new credit facility for general corporate purposes of the Company and its subsidiaries, including permitted acquisitions, refinancing of existing indebtedness and working capital. The amendment increased the aggregate amount of the revolving commitments from $85,000 to $115,000 through an extended June 28, 2024 maturity date, increased the term loan from $40,000 to $65,000 to reduce the outstanding revolving loan balance by the same amount and extend the maturity date from June 30, 2020 to June 28, 2024, and increased the total funded debt to EBITDA covenant ratio from a maximum of 3.00 to 3.25. The total commitment under the amended credit facility (revolving credit, term loan and swing line) is $185,000.

The credit facility consists of a $115,000 revolving credit facility and a $65,000 term loan. The revolving credit facility may be increased by up to an additional $25,000 at the Company’s option if lenders are willing to provide such increased commitments, subject to certain conditions. Up to $20,000 of the revolving credit facility may be borrowed in Canadian dollars, Euros or pounds sterling. The Company is the sole borrower under the credit facility. The obligations under the credit facility are guaranteed by certain of the Company’s direct and indirect wholly owned domestic subsidiaries and are secured by a pledge of all of the Company’s and such subsidiary guarantors’ assets, other than the equity interests of certain subsidiaries and assets held in non-core subsidiaries (as defined in the agreement). At December 31, 2019 and 2018, $62,563 and $41,500, excluding debt discounts, was outstanding under the term loan, respectively. At December 31, 2019 and 2018, $50,073 and $1,696, excluding debt discounts, was outstanding under the revolving credit facility, respectively. At December 31, 2019 funds of $29,144 were available for borrowing under the revolving credit facility. At December 31, 2019, the Company had $13,090 in letters of credit outstanding.

The interest rate for borrowings under the credit facility is based on, at the Company’s option, either (1) a base rate equal to a margin of 0.5% or 0.25%, depending on the Company’s ratio of total funded debt to EBITDA (as defined in the agreement), over the highest of (a) the federal funds effective rate, plus 0.50% , (b) Bank of America’s prime rate and (c) a rate based on the London interbank deposit rate (“LIBOR”) plus 1.50%, or (2) the one-, two- three- or six-month LIBOR plus a margin of 2.00% or 1.75%, depending on the Company’s ratio of total funded debt to EBITDA, as defined. A commitment fee of 0.375% is payable quarterly on the undrawn portion of the revolving credit facility. At December 31, 2019, the interest rate for borrowings under the revolving credit facility was 4.70% and the weighted average interest rate for borrowings under the term loan was 3.99%.

The revolving credit facility does not require amortization of principal. The term loan requires quarterly principal payments of $1,219, with the balance due at maturity. All borrowings may be paid before maturity in whole or in part at the Company’s option without penalty or premium, other than reimbursement of any breakage and deployment costs in the case of LIBOR borrowings.

The credit facility limits the Company’s and its subsidiaries’ ability to, among other things: incur additional indebtedness; incur liens or guarantee obligations; merge, liquidate or dispose of assets; make acquisitions or other investments; enter into hedging agreements; pay dividends and make other distributions and engage in transactions with affiliates, except in the ordinary course of business on an arms’ length basis.

Under the credit facility, the Company and its subsidiaries may not invest cash or property in, or loan to, the Company’s non-core subsidiaries in aggregate amounts exceeding 49% of the Company’s consolidated stockholders’ equity. In addition, under the credit facility, the Company and its core subsidiaries must maintain the following financial covenants:



	•		a ratio of total funded debt to EBITDA, as defined, of less than 3.25 to 1.0 as of the end of each fiscal quarter ending June 28, 2024 and thereafter; and
	•		a debt service coverage ratio (as defined in the agreement) of at least 1.5 to 1.0.

Any failure to comply with the financial or other covenants of the credit facility would not only prevent the Company from being able to borrow additional funds, but would constitute a default, permitting the lenders to, among other things, accelerate the amounts outstanding, including all accrued interest and unpaid fees, under the credit facility, to terminate the credit facility, and enforce liens against the collateral.

The credit facility also includes several other customary events of default, including a change in control of the Company, permitting the lenders to accelerate the indebtedness, terminate the credit facility, and enforce liens against the collateral.

For purposes of the Company’s senior secured facility: EBITDA, as defined, excludes the results of certain renewable energy projects that the Company owns and for which financing from others remains outstanding; total funded debt, as defined, includes amounts outstanding under both the term loan and revolver portions of the senior secured credit facility plus other indebtedness, but excludes non-recourse indebtedness of project company subsidiaries; and debt service, as defined, includes principal and interest payments on the indebtedness included in total funded debt other than principal payments on the revolver portion of the facility.

At December 31, 2019 funds of $29,144 are available for borrowing under the revolving credit facility.

July 2019 Long Term Finance Liability

In July 2019, the Company closed on one solar PV project under the Company’s master lease agreement, as discussed in Note 8, with a twenty-year term. In accordance with Topic 842, Leases, this transaction was accounted for as a failed sale as the Company retains control of the underlying assets. The proceeds received from the transaction were recorded by the Company as a long term financing facility with an interest rate of 0.28%, as a result of tax credits which were transferred to the counterparty. The principal and interest payments are due in semi annual installments and the long term finance facility matures on July 16, 2039, with all remaining unpaid amounts outstanding under the agreement due at that time. At December 31, 2019, $3,841 was outstanding under the long term finance liability.

November 2019 Long Term Finance Liability

In November 2019, the Company closed on two solar PV projects under the Company’s master lease agreement, as discussed in Note 8, with a twenty-year term. In accordance with Topic 842, Leases, this transaction was accounted for as a failed sale as the Company retains control of the underlying assets. The proceeds received from the transaction were recorded by the Company as a long term financing facility with an interest rate of 0.00%, as a result of tax credits which were transferred to the counterparty. The principal and interest payments are due in semi annual installments and the long term finance facility matures on November 8, 2039, with all remaining unpaid amounts outstanding under the agreement due at that time. At December 31, 2019, $8,794 was outstanding under the long term finance liability.

December 2019 Term Loan

In December 2019, the Company entered into a loan agreement at a fixed rate of 6.5% for gross proceeds of $27,473, for use in providing non-recourse financing for purchase of solar PV modules. Principal and interest amounts are due in quarterly installments beginning in March 2020. The term loan matures on December 31, 2021. At December 31, 2019, $26,970 was outstanding under the term loan, net of debt discounts and deferred financing fees.